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Give up 3G spectrum also PDF Print E-mail
Friday, 09 December 2011 00:00
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The Department of Telecommunications has done well to accept PSU-telco BSNL’s request to surrender its broadband wireless access (BWA) spectrum in 17 circles—it’s not quite clear why BSNL wants to hang on to the remaining three circles. The point is a simple one: since the cash-strapped company has just enough cash to run till April, after which it will need R25 crore of daily government dole to survive, where’s the money to invest in rolling out BWA networks? More important, given its fall in market share in even the basic mobile market, where’s the guarantee BSNL will be able to get customers for BWA where, given it is a new technology, the marketing will have to be that much more savvy. Indeed, given the poor consumer response to 3G services, and this applies to even the more savvy private-sector telcos, BSNL would do well to even return its 3G spectrum—it has got just 1.5 million customers on 3G, with no great incremental customer revenues from the segment. Between the two, it has paid R19,000 crore for them.

That’s the money the PSU needs desperately and, if returned to it, could be used to fund part of an attractive VRS for its 2.8 lakh employees who, between them, eat up about 46% of its top line (the comparable figure is 5-6% for private-sector mobile phone telcos). BSNL’s cash reserves were R30,000 crore before it paid for 3G/BWA, then it made a loss of R6,384 crore in 2010-11.

It’s not just the money, the larger problem with 3G/BWA was that BSNL didn’t even make a business case for this—the government just gave it the spectrum a year before the bidding, with the proviso that it would match the private sector bids! So much for the operational freedom that PSUs are supposed to enjoy. That, of course, also points to the government’s out-dated thinking where it wants a government player to offer all-India services at a reasonable tariff—never mind that in each case, from BSNL to Air India, customers have voted with their feet, moving on to savvier private sector firms.

 

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